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STATE OF MICHIGAN

IN THE DISTRICT COURT FOR THE

55TH

JUDICIAL DISTRICT

Deutsche Bank National Trust Company, Plaintiff, Case No. 11- XXXX-LT vs.

Hon. Donald L Allen, Jr. XXX Defendants, / Stuart A Best 2155 Butterfield Dr Suite 200-S Troy, MI 48084 Perry Thompson (P66464) Legal Services of South Central Michigan Attorneys for Defendants 3490 Belle Chase Way, Suite #50 Lansing, MI 48911 517-394-2985 /

PRETRIAL MEMORANDUM

This matter involves an attempt by the trustee of a trust that does not own the

mortgage or note in question to evict a family from their home after a fatally flawed

foreclosure. More importantly, the foreclosure followed an unlawful breach by the

servicer employed by the Plaintiff of the modification agreement entered into by the

homeowner and the servicer.

The house in question, a mere asset to the Plaintiff, is the home of the Defendant,

XXXXX, and her three children. Their home has been one of the few points of stability

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for Ms. XXXX and her children, which is why she has struggled so hard to remain in the

home in spite of knowing that the mortgage is hopelessly upside-down. Ultimately, she is

attempting to pay more than the home is worth for the benefit of her children. These

efforts included entering into the modification agreement that Plaintiff’s servicer. This

agreement was unilaterally breached by the Plaintiff and its servicer. Additionally, they

engaged in a series of other statutory and common law violations during this process,

which will be described in detail below.

Factual Background

Ms. XXXXX entered into a home loan agreement with Novastar Mortgage, Inc

(“Novastar”) on February 1, 2000. This mortgage was recorded on February 7, 2000 and

is attached as Exhibit A. A series of assignments of the mortgage then followed. On

March 1, 2000, Novastar attempted to assign to “The Chase Manhattan Bank, As Indenture

Trustee” although the assignment did not identify the trust for whom Chase was intended

to hold title. See Exhibit B. On April 27, 2007 “Novastar Mortgage, Inc. by power of

attorney for the “Bank of New York, as Successor to JPMorgan Chase Bank, N.A. F/K/A

The Chase Manhattan Bank” attempted to assign the mortgage to Novastar. See Exhibit C.

On June 6, 2007 a similar assignment from Novastar by power of attorney for Bank of

New York was executed, again assigning the mortgage to Novastar. See Exhibit D.

Thus, as of June 6, 2007 the mortgage was held by Novastar. Furthermore, the dates of

execution of these documents make it clear that it was intended by whomever was

directing the assignments of this mortgage that Novastar own the mortgage during the

summer of 2007, a fact the significance of which will be addressed below.

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On October 21, 2010 Saxon Mortgage, as attorney in fact for Novastar, executed an

assignment to “Deutsche Bank National Trust Company, as trustee for Novastar Mortgage

Funding Trust, Series 2006-4.” (“DBNTC” or “Plaintiff”) This assignment backdated

within the instrument to January 24, 2010. See Exhibit E. At all relevant times, Saxon

was the servicer for the mortgage.

In late 2009 and early 2010, Ms. XXXX had fallen behind on her mortgage payments

for a variety of reasons, including serial non-payment of child support by the father of her

children. She applied for a loan modification and submitted the necessary documents. On

March 23 she participated in a conference call in which she was told that she was receiving

a HAMP trial period plan. She later received a letter to this effect, which was dated March

22, 2010 and is attached as Exhibit F. Her first payment of $1,105.15 was due on May 1,

2010 with subsequent payments due on June 1 and July 1, after which she would receive a

permanent modification.

Ms. XXXX made her first payment as required. Subsequent payments were rejected

by Saxon. Ms. XXXX made dozens of attempts to resolve this in the months that

followed. Eventually her mortgage was accelerated as part of the foreclosure process, after

which Saxon had her apply for the Hardest Hit program. On October 21, 2010 she spoke

to a Saxon representative to see how this application was proceeding. She was told that

her house had already been foreclosed so the application was too late. The next day the

same representative told her that she had been incorrect, the house was not yet foreclosed,

but Saxon did not actually participate in the program so placing homeowners in the

application process for this program merely gave them a false sense of hope.

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It is noteworthy that the date on which a Saxon representative told Ms. XXXX that

her house had already been foreclosed is the same day that Saxon attempted to place the

mortgage into the trust in preparation to actually foreclose. Upon information and belief,

this date is the date on which Saxon decided that the foreclosure was going to occur

without regard to modification options and all future modification efforts were merely

efforts to pacify Ms. XXXX while the foreclosure progressed.

Ms. XXXX then applied for an in house modification program offered by Saxon,

the application for which Saxon lost numerous times. Legal fees and other charges were

accumulating and being added to the mortgage amount during this entire time, ultimately

adding $65,000 to her loan balance. Eventually she was told that her HAMP modification

was denied due to excessive forbearance, which essentially means that the balance was too

high to create a workable modification, although the balance only became too high due to

the repeated mishandling of her modification applications.

At various times during the series of events described above steps were taken to

proceed with a foreclosure by advertisement. On January 25, 2010 Scheiderman &

Sherman PC (“Schneiderman”) sent a letter to Ms. XXXX advising her of her right to

request a modification meeting under Michigan law. Ms. XXXX responded to this letter

and requested the meeting. The March 23 call in which she was told that she received a

TPP included Jonas Parker an attorney from Schneiderman as a participant and was

intended to be the meeting held in compliance with the statute. However, the only result of

the call was the granting of a TPP. At no time did Ms. XXXX receive the required

calculations under the Michigan statute.

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On January 22, 2011 Schneiderman caused notice of a sheriff’s sale to be posted on

Ms. XXXX’s home and the notice was published in the Ingham County Legal News on

January 20, January 27, February 3, and February 10. The sale was held on February 17,

2011 and a sheriff’s deed was granted to Plaintiff. The deed was recorded on February 28,

2011. See Exhibit G.

Incorrect Plaintiff

As a preliminary matter, the Plaintiff in this case is indicated to be DBNTC in its

individual capacity. This is not correct. The sheriff’s deed was issued to DBNTC as

trustee. DBNTC has no direct ownership of the property and thus has no right to evict Ms.

XXXX. While technically the complaint should be dismissed for this reason alone, in the

interest of judicial economy Ms. XXXX will consent to substituting the correct party.

However, if DBNTC is unwilling to make this correction, we would request that this

complaint be dismissed because the Plaintiff does not in fact own the property, even

looking only at the face of the documents filed with the complaint. For the remainder of

this memorandum, we will assume that the identity of the Plaintiff will be corrected and

thus when referring to Plaintiff we are referring to DBNTC as Trustee, not the Plaintiff as

originally filed.

Plaintiff Does Not Own the Mortgage or the Note

Michigan law requires that the “party foreclosing the mortgage is either the owner

of the indebtedness or of an interest in the indebtedness secured by the mortgage or the

servicing agent of the mortgage.” MCL 600.3204(1)(d). Saxon is the servicer, not

Plaintiff. Thus, Plaintiff must own the debt to foreclose.

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Plaintiff is trustee of a trust with a closing date of August 29, 2006. See Exhibit H.

The closing date is the date by which all assets must be placed in the trust. As noted

above, the mortgage was assigned to Novastar in two separate assignments in 2007. Thus,

the trust could not possibly have owned the mortgage by the closing date. Because the

trust is prohibited by its own organizational documents from taking an assignment after the

closing date, it could not possibly have been the mortgagee when it attempted to foreclose

on Ms. XXXX. Moreover, because Paragraph 19 of the mortgage, Exhibit I, requires that

the note and mortgage be transferred together, it would appear that the note was also

owned by Novastar in 2007, well after the closing date. Thus, Plaintiff could never be the

mortgagee or the owner of the note, and could therefore never foreclose on this mortgage.

In addition to the failure to assign the mortgage to Plaintiff in a timely manner, the

organizational documents of the trust require a specific series of assignments to place

mortgage loans in the trust. These assignments are intended, among other things, to create

bankruptcy remote assets. Because of the need to insulate assets of the trust from potential

bankruptcy filings by the originator, the trust is prohibited from taking assets that do not

follow the exact requirements for the series of assignments leading to ownership by the

trust. The bungled series of assignments, including assignment after the closing date,

strongly suggest that the other requirements in the assignment chain were not met. Of

course to be certain of these failings, Ms. XXXX will require discovery relating to the

assignments involved in the securitization process.

Thus, it appears that Novastar, or one of the entities prior to the trust in the assignment

chain, is actually the mortgagee and thus is the entity that should have foreclosed on the

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home. See Hendricks v US Bank, Washtenaw County Circuit Court, Case No. 10-849-CH,

attached.

Plaintiff Did Not Send Necessary Letter Regarding Modification Rights

Assuming the trust is found to be able to own the mortgage in spite of the

prohibition in its organizational documents, the assignment of the mortgage and note to

Plaintiff did not occur until October 21, 2010. MCL 600.3205a requires the foreclosing

party to send or cause to be sent a letter notifying the homeowner of their rights request

modification. This letter was sent to Ms. XXXX on January 25, 2010. This date is one

day after the back-dated assignment date, but nine months before the actual assignment

date. The attempt to back-date the assignment is an acknowledgement by Plaintiff and its

agents that Plaintiff needed to be the mortgagee at the time this letter was sent in order for

it to be valid. However, completing the assignment nine months after the letter is not

sufficient to establish that Plaintiff actually sent, or caused to be sent, the letter months

before ownership was attempted to be conveyed to it.

Moreover, the face of the letter itself shows that it was sent by and on behalf of

Saxon, the servicer. It cannot even be argued that Saxon caused this letter to be sent at the

direction of Plaintiff because Plaintiff did not gain ownership for nine months after the

letter was sent. Thus, the letter appears to have been sent by someone other than the

foreclosing party, while the statute specifically requires that the foreclosing party send or

cause to be sent the letter.

Plaintiff Did Not Own the Debt When It Started the Foreclosure Process

An entity must actually own the indebtedness secured by the mortgage at the time it

initiates foreclosure proceedings. MCL 600.3204(1)(d). Subsequent assignment of the

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note is not sufficient. Davenport v HSBC, 275 Mich. App. 344 (2007), Attached. The

assignment of the mortgage included language attempting to assignment the note as well.

Because this language in the assignment of mortgage is insufficient to assign the note, it is

possible that Plaintiff might still not own the note. However, even if a simultaneous proper

assignment of the note occurred, it still occurred after the date the foreclosure was initiated

by means of sending the modification notice letter to Ms. XXXX. Thus, Plaintiff did not

own the debt at the time it started the foreclosure as required by MCL 600.3204(1)(d) and

Davenport.

Failure to Comply With Modification Negotiation Requirements

Even if the letter sent to Ms. XXXX is found to be adequate in spite of Plaintiff not owning

the mortgage or the note at the time it was sent, the subsequent actions relating to MCL

600.3205c were wholly inadequate. MCL 600.3204 prohibits foreclosure by advertisement

if a modification agreement is reached and it also prohibits foreclosure by advertisement if

the homeowner qualifies for modification under the statute or without showing the figures

establishing that they do not qualify. Ms. XXXX was given a modification as part of the

meeting. The HAMP TPP was the modification. The fact that Plaintiff did not comply

with the requirement to consider Ms. XXXX for the Michigan modification and show her

the math establishing why she did not qualify, if in fact she did not qualify, shows that

Plaintiff viewed the TPP as a modification which eliminated the need to proceed with other

statutory requirements, unless of course Plaintiff was simply willfully ignoring Michigan

foreclosure law.

Thus, either the TPP was a modification, which required compliance by Plaintiff or

it was not, in which case Plaintiff was required to show why Ms. XXXX did not qualify

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under the Michigan statute before foreclosing. Either way, they were prohibited from

foreclosing by advertisement when they did.

Negligence

When the HAMP program was passed, the perception by the public was that banks

would be required to comply with the HAMP guidelines. In theory, they could be required

to comply, if Fannie Mae would enforce the terms of the HAMP agreements. However,

courts have repeatedly held that there is no private right of action for individual

homeowners to enforce HAMP. Phrased differently, HAMP participants owe no

enforceable duty under HAMP itself to homeowners.

However, Michigan courts have also specifically held that when in the performance of

a contract between two parties, one of the parties renders services to another they may be

liable for harm caused to the third person by the party’s failure to exercise reasonable care.

McBride v Pinkerton’s Inc, 1999 Mich. App. Lexis, 1198, Court of Appeals Nos. 202147

and 202204, Decided July 2, 1999, citing 2nd Restatement of Torts, section 324A,

Blackwell v Citizens Ins Co of America, 457 Mich 662 (1998); Smith v Allendale Mutual

Ins Co, 410 Mich 685 (1981); Bruan v York Properties, Inc 230 Mich App 138 (1998); and

Courtright v Design Irrigation, Inc 210 Mich App 528 (1995).

In McBride, the plaintiff was a resident in an apartment building. The owner of the

building and Pinkerton were parties to a contract in which Pinkerton agreed to provide

security services at the building. The plaintiff was shot in the lobby of the building in full

view of the Pinkerton guard. The plaintiff originally sought to be declared a third party

beneficiary of the contract between the building owner and Pinkerton. The court held that

while the plaintiff was not an intended beneficiary of the contract, Pinkerton’s performance

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of the contract involved their voluntary assumption of the duty to the plaintiff that they did

not otherwise have, and their breach of that duty was negligence.

The situation is no different in this case. Saxon, the agent of Plaintiff, may not have

had a duty enforceable by Ms. XXXX to attempt to modify her loan. But, once the

modification process was started by providing Ms. XXXX with an application for the

HAMP program and by accepting the application, Saxon had a duty of care which they

repeatedly breached during months of modification attempts. Furthermore, their repeated

assurances to her that her application was being considered stopped her from taking other

action to prevent the foreclosure, such a filing a Chapter 13 petition, which could have

prevented this foreclosure if filed early enough and which was not filed merely because of

Ms. XXXX’s reliance on the aid that Plaintiff’s agent appeared to be offering.

Thus, Saxon created a duty of care by appearing to render assistance to Ms. XXXX.

They then breached that duty of care by failing to follow through with the assistance they

initiated and by performing the modification related tasks that they did perform in such a

negligent manner that tens of thousands of dollars in new charges accrued on Ms. XXXX’s

account while they fumbled the modification process. The additional charges accruing on

Ms. XXXX’s account ultimately rendered a workable loan modification impossible, and

thus led to the harm Ms. XXXX has suffered, the potential loss her home and the mental

anguish that months of the threat of this loss has caused for her and her children.

Therefore, Saxon, the agent of Plaintiff, owed a duty to Ms. XXXX, breached this

duty, and in doing so caused unnecessary charges to accrue on her account and ultimately

led to the sheriff’s sale being challenged here. Plaintiff is responsible for the negligent

conduct of its agent and should be ordered by this court to place Ms. XXXX in the position

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she would have been in but for the negligence of its agent as well as paying damages for

the distress caused to Ms. XXXX and her family.

Breach of Contract

In Michigan, to state a breach of contract claim, a party must first show that a valid

contract existed. In re Brown, 342 F.3d 620, 628 (6th Cir. 2003); Wolverine World Wide,

Inc. v. Wolverine Canada, Inc., 653 F.Supp.2d 747, 754-55 (W.D. Mich. 2009). “The

essential elements of a valid contract are: (1) parties who are competent to contract, (2) a

proper subject matter, (3) legal consideration, (4) mutuality of agreement, and (5)

mutuality of obligation.” Wolverine World Wide, 653 F.Supp.2d at 755 (citing Brown,

342 F.3d at 628). Thus, “a valid contract requires mutual assent on all essential terms.”

Eerdmans v Maki, 573 N.W.2d 329, 332 (Mich. App. 1998). Mere discussions and

negotiation are not sufficient to meet the requirements of a contract. Id. Consequently,

“[b]efore a contract can be completed, there must be an offer and acceptance”, id., and

consideration, Kirchhoff v Morris, 275 N.W.2d 778, 780 (Mich. 1937). After showing that

a valid contract existed, “a plaintiff alleging a breach of contract must show (1) the terms

of the contract, (2) how the defendant breached the terms of the contract, and (3) that the

breach caused the plaintiff’s injury.” Wolverine World Wide, 653 F.Supp.2d at 755 (citing

Brown, 342 F.3d at 628).

In this case, the TPP Agreement was an offer made by Plaintiff’s agent to Ms.

XXXX. Ms. XXXX accepted the offer in the manner that the offer instructed her to accept

– by tendering payment. As the second paragraph of the offer states, “To accept this offer,

you must make new monthly “trial period payments” in place of your normal monthly

mortgage payment.”

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Further, Ms. XXXX’s compliance with the terms of the TPP can constitute

consideration. Her compliance included not only making one monthly payment and

tendering subsequent payments that Plaintiff’s agent rejected, but also providing

documentation to Plaintiff’s agent. Finally, because Plaintiff’s agent failed to perform

their obligations under the contract, Ms. XXXX incurred damages.

1. Plaintiff’s agent’ TPP is an enforceable offer to Ms. XXXX.

A party makes an offer when it shows a “manifestation of willingness to enter into a

bargain, so made as to justify another person in understanding that his assent to that

bargain is invited and will conclude it.” Eerdmans, 573 N.W.2d at 332 (quoting

Restatement Contracts, 2d § 24.). Here, the TPP Agreement contains all the requirements

of an enforceable offer. The TPP Agreement contains unequivocal terms that leave

nothing for the parties to negotiate. As quoted above, the TPP letter specifically refers to

itself as an “offer” an provides instructions for accepting. Further, it provides that if Ms.

XXXX made payments as directed, she would receive a modification subject to

verification of the financial information she had previously provided Saxon.

The letter also specifically indicates that it is part of the “Home Affordable

Modification Program”. This is not a generic label. The term has a technical meaning,

supplied by reference to the HAMP Program Documentation. Thus the TPP agreement

manifests a willingness to enter into a bargain and Ms. XXXX’s assent would conclude

that agreement. If Ms. XXXX complies with the agreement, then Plaintiff’s agent will

provide her with a permanent modification.

The language in the TPP is an unequivocal binding offer. In fact, Williams v.

Geithner, 2009 WL 3757380, at *3 (D. Minn. Nov. 9, 2009), recognized the binding nature

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of this language. The Williams Court, interpreting HAMP rules, recognized that servicers

evaluate borrower eligibility prior to the offer of a TPP Agreement and that compliance

with an accepted TPP Agreement mandates a permanent modification: “If the loan

qualifies for a modification after consideration of all the [eligibility] factors, the servicer is

obligated to provide a trial period loan modification. If the borrower remains current

throughout the trial period, the servicer must then provide a loan modification.” Id. 2009

WL 3757380, at *3. Moreover, a federal district court in Massachusetts, after considering

Defendants argument that the TPP is not an enforceable offer, stated that “it is plain that

the TPPs were offers.” Bosque v Wells Fargo Bank, ___ F.Supp.2d ___, 2011 WL 304725

*5 (D. Mass. Jan. 26, 2011). Plaintiff’s agent’s TPP is therefore an enforceable offer to

Ms. XXXX.

2. Ms. XXXX accepted Plaintiff’s agent’s offer.

An acceptance of an offer must be unambiguous and strictly conform with the

offer. Eerdmans, 573 N.W.2d at 332. “ ‘[A]n acceptance sufficient to create a contract

arises where the individual to whom an offer is extended manifests an intent to be bound

by the offer, and all legal consequences flowing from the offer, through voluntarily

undertaking some unequivocal act sufficient for that purpose.’ ” Kloian v Domino’s Pizza,

733 N.W.2d 766, 771 (Mich. App. 2007) (quoting Blackburne & Brown Mortgage Co. v

Ziomek, 692 N.W.2d 388 (Mich. App. 2004)).

Ms. XXXX unambiguously accepted the offer in the manner required by the offer

and strictly complied with the terms of the offer.

After the second paragraph a section of boxed text sets out the payments Ms.

XXXX was required to make during the three-month period. Ms. XXXX was required to

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pay $1,105.15 in May, June, and July 2010. Ms. XXXX accepted the terms of the TPP.

Ms. XXXX provided Plaintiff’s agent with her financial documents. She timely made the

first payment due in May and tendered the June and July payments. She also submitted

additional documents requested by Plaintiff’s agent. Given these facts, it is clear that Ms.

XXXX intended to be bound by the offer, and all legal consequences flowing from the

offer.

3. The TPP is a valid contract as there exists sufficient consideration.

A valid contract must have consideration. Kirchhoff, 275 N.W.2d at 780. “To have

consideration there must be a bargained-for exchange. General Motors Corp. v Dep’t of

Treasury, 644 N.W.2d 734, 738 (Mich. 2002). “There must be ‘a benefit on one side, or a

detriment suffered, or service done on the other.’ ” Id. (quoting Plastray Corp. v Cole, 37

N.W.2d 162 (Mich. 1949). However, a preexisting duty to provide the service under the

contract negates a finding of consideration. Alar v Mercy Memorial Hospital, 529 N.W.2d

318, 322 (Mich. App. 1995).

In this case, Ms. XXXX’s performance under the contract satisfies the

consideration requirement. In a similar case in Massachusetts, the federal district court

judge addressing a breach of contract claim under the TPP, held that the homeowners

satisfied the consideration requirement under the terms of the TPP. Durmic v J.P. Morgan

Chase Bank, 2010 WL 4825632 *3 (D. Mass. Nov. 24, 2010). The district court judge

stated:

Under the TPP, [the homeowners] were required to provide documentation of their current income, make legal representations about their personal circumstances, and agree to undergo credit counseling if requested to do so by [the lender]. [citation omitted]. [The homeowners] could also be required to make payments into a newly established escrow

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account. [citation omitted]. [The homeowners] were under no preexisting legal obligation to meet any of these conditions.

Id.

The Bosque court also found that the terms of the TPP were all new legal

detriments to the homeowners that flowed from their acceptance of the TPP. In reaching

that conclusion, the Bosque court held that the homeowners had sufficiently stated that the

TPP was supported by consideration. Bosque, 2011 WL 304725 *6. Like the homeowners

in Durmic and Bosque, Ms. XXXX’s TPP was supported by adequate consideration. She

too provided documentation and made legal representations.

4. Ms. XXXX sufficiently alleges damages.

To state a claim for breach of contract, a plaintiff must also allege that the breach

caused the plaintiff’s injury. Wolverine World Wide, 653 F.Supp.2d at 755. In Durmic,

2010 WL 4825632 *3, the federal district court found that the homeowners in that case

sufficiently alleged damages. The court stated: “[p]laintiffs have pled that with each

passing month, their original loan documents remain in effect, subjecting them to accrual

of charges, a further risk of delinquency, damage to their credit ratings, and a heightened

risk to eventually losing their homes to foreclosure.” Here, Ms. XXXX has suffered harm

as a result of Defendants’ breach of the contract. Charges continued to accrue on her

account. Her credit continued to suffer. She continued to fear loss of her home. Most

importantly, as a consequence of Plaintiff’s agent’s breach, Ms. XXXX’s fear of

foreclosure became a reality when the sheriff’s sale was conducted.

Given the foregoing, Ms. XXXX sufficiently alleged damages.

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This exact analysis was recently accepted in the U.S. District Court for the Western

District of Michigan in Darcy v. Citifinancial (Case No. 1:10-cv-848, attached) to deny the

defendant bank’s motion for summary judgement.

Timeliness of Ms. XXXX’s Challenge

At the initial appearance in this matter counsel for Plaintiff alleged that this court

did not have jurisdiction to here this matter, stating that Ms. XXXX needed to raise these

issues in Circuit Court and it was too late to file such a challenge. Allegations that the time

to challenge foreclosure actions has passed are most commonly based on Overton v.

MERS, unpublished Michigan Court of Appeals Case No 284950, May 28, 2009, although

counsel did not cite this case. Overton is quite simply not applicable. It involved an

affirmative case filed by the home owner near the end of the redemption period. While we

contend that Overton was wrongly decided, the procedural posture of this case is

completely different.

Ms. XXXX is not bringing this action. Plaintiff has brought this action to force her

from her home. She is merely pointing out that they have no legal right to do so because

the means by which they claim to have acquired title were defective. Such a defensive

action was specifically endorsed by the Court of Appeals in Manufacturers Hanover

Mortgage Corporation v. Snell, 142 Mich App 548 (1985). As stated in Snell,

The Supreme Court has long held that the mortgagor may hold over after foreclosure by advertisement and test the validity of the sale in the summary proceeding. Reid v Rylander, 270 Mich 263, 267; 258 NW 630 (1935); Gage v Sanborn, 106 Mich 269, 279; 64 NW 32 (1895). Otherwise, the typical mortgagor who faces an invalid foreclosure would be without remedy, being without the financial means to pursue the alternate course of filing an independent action to restrain or set aside the sale. Reid, supra, p 267; see, also, 16 Michigan Law and Practice, Mortgages, § 174, pp 438-439. The mortgagor may raise whatever defenses are available in a summary eviction proceeding. MCL 600.5714;

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MSA 27A.5714;Federal National Mortgage Ass'n v Win- [Page 554]

gate, 404 Mich 661, 676, fn 5; 273 NW2d 456 (1979). The district court has jurisdiction to hear and determine equitable claims and defenses involving the mortgagor's interest in the property. MCL 600.8302(3); MSA 27A.8302(3); DCR 754.7(b)(1).

Furthermore, it was Plaintiff’s choice to pursue foreclosure by advertisement in this

matter, which resulted in the appearance before this court being Ms. XXXX’s first

opportunity to challenge to proceedings. It is disingenuous for a bank to choose to

foreclose via a method that does not include an opportunity to test the validity of the

proceeding and then complain about the homeowner defending her home in manner that is

not only allowed under the Snell decision, but if Overton is to be followed is the only

method available to a homeowner. This is especially true in light of the “dual track” used

by Plaintiff and its agents in which Ms. XXXX was presented with various loan

modification opportunities while Plaintiff was simultaneously moving to foreclose. Like

most homeowners, by the time Ms. XXXX realized that Plaintiff’s agent would not truly

assist her, the sale had already occurred and thus the sale could not be enjoined.

Conclusion

This Court has the jurisdiction to hear this matter and Ms. XXXX’s challenge to the

underlying foreclosure at this point is timely. Plaintiff’s foreclosure of Ms. XXXX’s

mortgage violated Michigan law because they were not the mortgagee, they did not own

the note, they did not comply with the notice requirement regarding the right to discuss

modification under Michigan law, and they did not properly conduct modification

negotiations when Ms. XXXX managed to request negotiations in spite of the improper

notice. Additionally, the TPP provided by Plaintiff’s agent was a binding contract, which

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Plaintiff and it agent breached. Finally, the manner in which Plaintiff’s agent conducted

modification negotiations constituted negligence, which caused damage to Ms. XXXX.

Not only should Plaintiff not receive summary possession of Ms. XXXX’s home,

their complaint should be dismissed with prejudice. Furthermore, Ms. XXXX requests that

this Court enter an order setting aside the sheriff’s sale; granting Ms. XXXX money

damages for the harm she has suffered as a result of the negligence and breach of contract

committed by Plaintiff through its agent, Saxon; imposing a loan modification based on the

mortgage principal at the time Ms. XXXX applied, rather than the inflated amount caused

by Plaintiff’s wrongful conduct; and, awarding attorney’s fees for defending this action.

Alternatively, Ms. XXXX requests an order allowing for discovery in order to more

fully develop the factual basis for the defenses and counter claims made by Ms. XXXX.

Dated: ____________________

By: /s/____________________________ Perry Thompson (P66464) Legal Services of South Central Michigan Attorneys for Defendants 3490 Belle Chase Way, Suite #50 Lansing, MI 48911 517-394-2985